Revenue is the money the company receives for selling their product or service. It is calculated by taking the selling price and multiplying it by the number of units sold.
Profit is the amount of money left over after costs have been covered. It is therefore calculated by: total revenue minus total costs. Profit can be used as a measure of the businesses success, attracting investors and reinvesting back into the business. The quality of profit can also be measured. Low quality profit is gaining money from an event which is unlikely to occur again in the future but high quality profit is from normal trading activities which should continue to occur in the future. It is important when told a company's profit, that it is clear what type of profit it is (gross, operating, pre-tax or after tax).
